UBS and C Suisse told to issue more bonds to meet new capital standards

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UBS and Credit Suisse need to issue billions more in bonds to meet Switzerland’s new capital requirements and prepare for tougher global standards, the country’s central bank said.

Bloomberg News reports that while the banks have improved their capital situation over the past year, "they need to take action - particularly in meeting the leverage ratio requirements and the gone-concern requirements," the Swiss National Bank said in its annual financial stability report, published Thursday ahead of its monetary policy assessment.

Switzerland this year increased the amount and quality of capital that its two biggest banks have to hold relative to their total assets, called the leverage ratio. UBS and Credit Suisse have until the end of 2019 to issue bonds and build up capital to comply with the rules, designed to protect the economy should one of them collapse.

The new rules call for minimum levels of so-called gone-concern and going-concern capital, depending on whether the bank is still in business or whether it has failed and needs to be wound down. Banks use contingent convertible bonds, or CoCos, to meet the requirements. These instruments convert into equity or get written down if capital falls below a certain threshold, supporting the bank in a crisis.

To access the complete Bloomberg News article hit the link below:

Credit Suisse, UBS Need to Act on Capital Rules, SNB Says

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